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November 19, 2012

Can I Get that Pizza for Delivery? Court Certifies Class in Papa John’s Case

On November 9, 2012, the US District Court for the Western
District of Washington allowed Papa John’s customers who received text messages
advertising Papa John’s pizzas to seek relief in a class action that includes potentially
hundreds of thousands of customers. In the
lawsuit ,
named plaintiff Maria Agne claims that certain Papa John’s franchisees provided
lists of customers’ phone numbers to a marketing company, OnTime4U. OnTime4U allegedly sent text messages containing
Papa John’s advertisements to these customers -- with some customers receiving
dozens of messages -- even though no customers consented to receive such
messages. Ms. Agne sued not only
OnTime4U and the franchisees she believes gave out phone numbers, but also the
national Papa John’s franchisor, which she claims directed, encouraged, and
authorized the franchisees to use OnTime4U’s services. The lawsuit raises claims under the federal Telephone
Consumer Protection Act (TCPA),
as well as Washington state law claims, and seeks at least $500 in damages for
each violation of the TCPA.

Papa John’s maintains that Ms. Agne overstates any
involvement by Papa John’s in OnTime4U’s advertising campaign. According to Papa John’s, whether a
franchisee used OnTime4U was solely the decision of that individual franchisee,
and Papa John’s did not and could not require a franchisee to use
OnTime4U. Papa John’s also claims that,
after receiving complaints from customers about the text messages and
concluding that OnTime4U’s text messages might violate the TCPA, Papa John’s promptly
disavowed any relationship with OnTime4U and instructed its franchisees to
reclaim any information they had provided to OnTime4U or to ask OnTime4U to
destroy that information.

The court’s decision, which certified both a nationwide class
and a statewide class, pointed out that Papa John’s had not contracted with
OnTime4U, but nevertheless concluded that there was evidence of Papa John’s
involvement with the advertising campaign. In particular, the court observed that some employees of Papa John’s encouraged
franchisees to use OnTime4U and that OnTime4U made a marketing presentation at a
Papa John’s conference attended by its franchisees. The court further concluded that questions
regarding Papa John’s relationship with OnTime4U applied equally to all class
members and thus supported its decision to proceed as a class action. In addition, the court explained that there
was no indication that any customer had consented to receiving text messages
from Papa John’s and therefore the question of customer consent did not preclude
class certification. Moreover, the court
rejected Papa John’s argument that the TCPA requires that each customer have
been charged for a text message and Papa John’s argument that Ms. Agne could
not recover because her cell phone was in her ex-husband’s name.

The court’s holding potentially could lead to one of the
largest awards ever under the TCPA, which could be hundreds of millions of
dollars given the size of the classes, the scope of the advertising campaign,
and the availability of $500 per TCPA violation. Before any such award, however, Papa John’s
is likely to seek an immediate appeal of the court’s class certification decision. In addition, Papa John’s likely will raise
numerous arguments as to why it is not liable for advertisements sent by
OnTime4U, including that Papa John’s did not participate in OnTime4U’s campaign
and should not be vicariously liable for the acts of its franchisees.

Whatever the ultimate outcome, the lawsuit and recent decision
demonstrate the potential risks for franchisors that are even marginally
involved in franchisees’ advertising decisions.
It also shows the potential for large-scale class actions seeking
significant damages under the TCPA where parties employ text message
advertising aimed at customers that have never provided any consent. It is unquestionable that this form of
advertising can reach a massive number of people in a short amount of time, so
franchisors should beware.